Interest-only financing not possible? It is available through our international providers, and at competitive interest rates!

Interest-only financing not possible? It is available through our international providers, and at competitive interest rates!

By choosing interest-only financing, it is still possible to meet sustainability requirements and cover operating costs in these times of higher interest rates.

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In a market where interest rates are rising sharply and Dutch banks are becoming increasingly selective, investors or developers can often encounter unpleasant surprises. The usual expectation that a bank will extend a loan is no longer a given. This is due to the upcoming Basel 4 regulations and the reduction of the financing book required of Dutch banks by the DNB.

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In addition, interest rates at Dutch banks have risen sharply and are now generally more expensive than those charged by foreign banks. Dutch banks also maintain the repayment requirement, even if the LTV is 50% or less! Consequently, the supply of financing in the Netherlands has never been greater. It's worthwhile for foreign providers (banks, insurers, hedge funds, mezzanine, or junior lenders) to come to the Netherlands now. After all, Dutch real estate is a strong asset class, and the debtors and legislation are also reliable.

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Daan Reekers explains: “We now finance 80% of the refinancing issues we encounter in our practice through alternative means or with foreign providers. Unfortunately, the traditional Dutch major banks have no other choice. Due to strict regulations, not only is the higher interest rate a bottleneck for many investors, but adhering to the mandatory repayment requirement is also a deal-breaker. We've just seen a client refinance with a 46% LTV, where the interest rate almost quadruples to a total interest rate of 6,75% for 5 years. This client is also required to make a 2% repayment. As you can imagine, this causes many problems. We were ultimately able to arrange this financing with a foreign provider, offering a 50% LTV interest-only loan with an interest rate of Euribor + 1,75%! The client could even opt for a 10-year interest rate at 5,95%!”

Diversity of different providers:

Fortunately, this shortage is also creating space for alternative funding streams in the market. For example, there are more crowdfunding and private lending providers, such as professionalized hedge funds, a large number of pension and insurance funds, and German banks are entering the market.

Converting surplus value into liquidity:

With foreign financiers, it's also easier to release any equity. "We don't just finance with banking partners who have to consider the RWAs and upcoming Basel 4 legislation. With international pension or insurance funds, for example, we can offer better and more competitive rates with longer options for legal terms of 7 to even more than 10 years. Much more is possible than people think, and the market is very dynamic. As a debt broker, we're involved in the procurement of funds every day, which also proves our added value," says Reekers.

Quality Data makes better deals:

Do you, as an investor and developer, want to be bankable abroad? Then you need to ensure you have your data under control. Foreign financiers are accustomed to working with cash flow models, but above all, transparency in data. Reekers continues: “It's about professionalism and 'being bankable' for the debtor, now and in the future. Digitizing financial processes is becoming more important every day. Moreover, access to data and its quality are more important than ever. We live in a wide world with access to money. As a real estate professional, you therefore need to be financially professional, and that's what we support our clients with.”